Comprehension
While Section 245C of the Income Tax Act, 1961 provides that the disclosures as to income “not disclosed before the Assessing Officer” must accompany the application filed before the Settlement Commission, Section 245H provides that if the assessee has cooperated with the Settlement Commission and has made “full and true disclosure of his income”, the Settlement Commission may grant immunity from prosecution and penalty. It is the case of the Revenue that Section 245H (1) cannot be read in isolation as Section 245C is embedded in 245H(1), and hence, both the Sections must be read harmoniously. That when so read, the requirement under Section 245H would be that disclosure of income “not disclosed before the Assessing Officer” must be made before the Commission
In this regard, it is observed that even if the pre-conditions prescribed under Section 245C are to be read into Section 245H, it cannot be said that in every case, the material “disclosed” by the assessee before the Commission must be something apart from what was discovered by the Assessing Officer. Section 245C read with Section 245H only contemplates full and true disclosure of income to be made before the Settlement Commission, regardless of the disclosures or discoveries made before/by the Assessing Officer. It is to be noted that the Order passed by Assessing Officer based on any discovery made, is not the final word, for, it is appealable. However, the assessee may accept the liability, in whole or in part, as determined in the assessment order. In such a case, the assessee may approach the Settlement Commission making ‘full and true disclosure’ of his income and the way such income has been derived. Such a disclosure may also include the income discovered by the Assessing Officer.
[Extracted with edits from the decision of the Supreme Court in Kotak Mahindra Bank Ltd. v. Commissioner of Income Tax, Bangalore, 2023 LiveLaw (SC) 822, dated September 25, 2023].
In this regard, it is observed that even if the pre-conditions prescribed under Section 245C are to be read into Section 245H, it cannot be said that in every case, the material “disclosed” by the assessee before the Commission must be something apart from what was discovered by the Assessing Officer. Section 245C read with Section 245H only contemplates full and true disclosure of income to be made before the Settlement Commission, regardless of the disclosures or discoveries made before/by the Assessing Officer. It is to be noted that the Order passed by Assessing Officer based on any discovery made, is not the final word, for, it is appealable. However, the assessee may accept the liability, in whole or in part, as determined in the assessment order. In such a case, the assessee may approach the Settlement Commission making ‘full and true disclosure’ of his income and the way such income has been derived. Such a disclosure may also include the income discovered by the Assessing Officer.
[Extracted with edits from the decision of the Supreme Court in Kotak Mahindra Bank Ltd. v. Commissioner of Income Tax, Bangalore, 2023 LiveLaw (SC) 822, dated September 25, 2023].
Question: 1
The Settlement Commission, on an application for settlement of a case by the assessee can grant immunity from prosecution. Which of the following is correct?
The Settlement Commission, on an application for settlement of a case by the assessee can grant immunity from prosecution. Which of the following is correct?
Updated On: Nov 7, 2024
- The immunity from prosecution can be granted by the Settlement Commission only when the income disclosed by the Assessee to the Settlement Commission has not been discovered by the assessing officer before the disclosure by the assessee
- The immunity from prosecution can be granted by the Settlement Commission even if the Assessee has not cooperated with the Settlement Commission
- Immunity from prosecution can be granted only if the assessee makes before the Settlement Commission full and true disclosure of his income, the way income was derived, additional amount of tax payable on such income and other particulars
- The immunity from prosecution can be granted by the Settlement Commission for offences under the Income Tax Act as well offences under the IPC post 2007
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The Correct Option is C
Solution and Explanation
Immunity from prosecution by the Settlement Commission requires the assessee to
make a full and true disclosure of income, tax payable, and other relevant details.
The correct option is (C): Immunity from prosecution can be granted only if the assessee makes before the Settlement Commission full and true disclosure of his income, the way income was derived, additional amount of tax payable on such income and other particulars
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Question: 2
Chapter XIX-A, sections 245A-245M dealing with Settlement of Cases was inserted in the Income Tax Act, 1961 by which of the following amendment Act?
Chapter XIX-A, sections 245A-245M dealing with Settlement of Cases was inserted in the Income Tax Act, 1961 by which of the following amendment Act?
Updated On: Nov 7, 2024
- Taxation Laws (Amendment) Act, 1975.
- Taxation Laws (Amendment) Act, 1987
- Taxation Laws (Amendment) Act, 2007
- Taxation Laws (Amendment) Act, 2014
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The Correct Option is A
Solution and Explanation
Chapter XIX-A, which introduced sections 245A-245M on the settlement of cases,
was added by the Taxation Laws (Amendment) Act, 1975.
The correct option is (A): Taxation Laws (Amendment) Act, 1975.
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Question: 3
Consider the following statements.
I. The High Courts and Supreme Court while exercising powers under Articles 32, 226 or 136 of the Constitution of India, as the case may be, should not interfere with an order of the Settlement Commission except on the ground that the order contravenes provisions of the Act or has caused prejudice to the opposite party.
II. The High Courts and Supreme Court while exercising powers under Articles 32, 226 or 136 of the Constitution of India, as the case may be, may interfere with an order of the Settlement Commission on the grounds of fraud, bias or malice.
III. The Settlement Commission provided quick and easy remedy to the assessee allowing him to make full and true disclosure and therefore avoid the prosecution and appeals. Thus, the order of the Settlement Commission cannot be questioned by the Supreme Court or the High Court on any ground
Choose the correct answer from the Code given below
Consider the following statements.
I. The High Courts and Supreme Court while exercising powers under Articles 32, 226 or 136 of the Constitution of India, as the case may be, should not interfere with an order of the Settlement Commission except on the ground that the order contravenes provisions of the Act or has caused prejudice to the opposite party.
II. The High Courts and Supreme Court while exercising powers under Articles 32, 226 or 136 of the Constitution of India, as the case may be, may interfere with an order of the Settlement Commission on the grounds of fraud, bias or malice.
III. The Settlement Commission provided quick and easy remedy to the assessee allowing him to make full and true disclosure and therefore avoid the prosecution and appeals. Thus, the order of the Settlement Commission cannot be questioned by the Supreme Court or the High Court on any ground
Choose the correct answer from the Code given below
I. The High Courts and Supreme Court while exercising powers under Articles 32, 226 or 136 of the Constitution of India, as the case may be, should not interfere with an order of the Settlement Commission except on the ground that the order contravenes provisions of the Act or has caused prejudice to the opposite party.
II. The High Courts and Supreme Court while exercising powers under Articles 32, 226 or 136 of the Constitution of India, as the case may be, may interfere with an order of the Settlement Commission on the grounds of fraud, bias or malice.
III. The Settlement Commission provided quick and easy remedy to the assessee allowing him to make full and true disclosure and therefore avoid the prosecution and appeals. Thus, the order of the Settlement Commission cannot be questioned by the Supreme Court or the High Court on any ground
Choose the correct answer from the Code given below
Updated On: Nov 7, 2024
- All are true
- Only III is true
- I and II are true
- II and III are true.
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The Correct Option is C
Solution and Explanation
Statements I and II are correct. The High Courts and Supreme Court may intervene
with orders of the Settlement Commission only on specific grounds like contravention of the
Act, fraud, or bias. Statement III is incorrect as judicial review is not entirely barred.
The correct option is (C): I and II are true
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Question: 4
Consider the given statements.
I. An immunity granted to a person from prosecution shall stand withdrawn if such person fails to pay any sum specified in the settlement order.
II. Settlement Commission cannot grant immunity from prosecution where the proceedings for the prosecution have been instituted before the date of receipt of the application under section 245C.
III. An immunity from prosecution once granted by the Settlement Commission cannot be withdrawn on any ground.
Choose the correct answer from the Code given below
Consider the given statements.
I. An immunity granted to a person from prosecution shall stand withdrawn if such person fails to pay any sum specified in the settlement order.
II. Settlement Commission cannot grant immunity from prosecution where the proceedings for the prosecution have been instituted before the date of receipt of the application under section 245C.
III. An immunity from prosecution once granted by the Settlement Commission cannot be withdrawn on any ground.
Choose the correct answer from the Code given below
I. An immunity granted to a person from prosecution shall stand withdrawn if such person fails to pay any sum specified in the settlement order.
II. Settlement Commission cannot grant immunity from prosecution where the proceedings for the prosecution have been instituted before the date of receipt of the application under section 245C.
III. An immunity from prosecution once granted by the Settlement Commission cannot be withdrawn on any ground.
Choose the correct answer from the Code given below
Updated On: Nov 7, 2024
- Only I is true
- I and II are true but III is not true.
- II and III are true
- All are true
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The Correct Option is B
Solution and Explanation
Statements I and II are correct. Immunity can be withdrawn if specified conditions
are not met, and immunity cannot be granted if prosecution proceedings were instituted before
the application. Statement III is incorrect.
The correct option is (B): I and II are true but III is not true
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Question: 5
Choose the most appropriate answer from the following.
Choose the most appropriate answer from the following.
Updated On: Nov 7, 2024
- When a person has made an application for settlement of a case before the Settlement Commission and the same has been allowed, such person shall not be allowed to make subsequent application for settlement in future cases
- When a person has made an application for settlement of a case before the Settlement Commission and the same has been allowed, any company in which such person holds more than fifty per cent of the shares shall not be allowed to make subsequent application for settlement in future cases
- When a person has made an application for settlement of a case before the Settlement Commission and the same has been allowed, there is no bar on such person or any related person of such person from making subsequent applications for settlement in future cases
- Both (a) and (b).
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The Correct Option is D
Solution and Explanation
Both statements (A) and (B) are correct, as they reflect the restrictions on further
applications for settlement after one has already been allowed for a person and any company
in which they hold a controlling interest.
The correct option is (D): Both (a) and (b).
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